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Prosecutors Drowning in Data Urged to Collect Less Evidence

June 15, 2022, 8:45 AM

Prosecutors struggling to pore through mushrooming amounts of electronic data they uncover during corporate crime investigations are beginning to hear counterintuitive advice from the Justice Department: Collect less evidence.

The nascent strategy of selectively seizing fewer computers, cell phones, and hard drives coincides with an exponential growth of available e-data. It comes amid repeated DOJ failures in processing and turning over evidence to the defense.

But it’s also controversial and still not practiced in much of the country. The instructions to narrow collections, which will be rolled out nationwide later this year in mandatory training for all 6,000 federal prosecutors, represent a sea change from decades of law enforcement dogma that if evidence exists, it must be gathered.

“Limiting how much evidence you collect is a crude way to address the problem of overwhelming amounts of information,” said Nathaniel Mendell, a former acting US attorney in Boston and now a partner at Morrison and Foerster LLP. “But it usually yields a more effective investigation and prosecution.”

The government’s growing disadvantage against deep-pocketed defense firms with high-powered computer analysis tools is adding urgency to the evolving approach.

The consequences for DOJ were highlighted this spring when the department settled an alleged mortgage fraud conspiracy for $3,000 in maximum losses—after initially valuing the loan scheme at $500 million. The judge first admonished prosecutors for a “disturbing inability” to handle all the data.

That incident and other high-profile DOJ document disclosure missteps of late—causing a mistrial in Michael Avenatti’s California embezzlement case, and an extraordinary post-conviction dismissal of a sanctions evasion case against an Iranian banker—are motivating some of the soul searching over how to collect less.

The assistant US attorneys in San Jose, Calif., pursuing wire fraud charges against former Theranos COO Ramesh “Sunny” Balwani also appear to be embracing investigative restraint. The judge noted, in an opinion last month denying Balwani’s dismissal bid, that agents seized 16 devices with 21.4 terabytes of data from a Theranos consulting firm’s office. Only 0.8 terabyte was responsive to their search warrant date range, sparing prosecutors from reviewing roughly 130 million pages of remaining data.

US attorney’s offices are now storing 10 times the amount of electronic data they had just six years ago, according to DOJ’s budget request for fiscal 2023. That volume—more than 4 petabytes of information—is projected to double again by next year.

In a particular criminal case, the need to process excessive data can bog down the pretrial discovery period while creating more opportunities for prosecutors to run afoul of document disclosure rules—violations that can result in career-tarnishing sanctions.

DOJ will be advancing the “smart collection” approach as part of the required annual discovery training for prosecutors, officials told Bloomberg Law in an interview. It will mark just the second year in which the department’s education program will emphasize avoiding over-collections and reducing the scope of information that’s retained from seized devices.

Still, some veteran prosecutors see drawbacks to preemptively limiting their own evidence.

A nationwide directive “has the risk of encouraging investigations that are not thorough, and sometimes that means not finding exculpatory information,” said Christopher Stetler, who was deputy chief of Chicago’s US attorney’s office through the end of 2021.

It “could be a disaster,” said Rhett DeHart, a former acting US attorney in South Carolina. “I always wanted to get as much information as I reasonably could and turn over as soon as possible, and just put all the cards on the table.”

‘Not In Our Best Interests’

Senior leaders on a corporate crime advisory group convened last year by Deputy Attorney General Lisa Monaco discussed targeted investigations as one method to combat e-discovery challenges, said Mendell, who served on the advisory group through the end of March.

In the interview this month, DOJ officials, who were granted anonymity, acknowledged that under-collection of evidence also carries risks and that getting buy-in across the department to restrict seizures remains a work in progress. They also stressed limiting searches won’t be practical in every case.

Through a variety of trainings and guidance, “the department in very real ways is taking steps to change the culture,” said one official. “And I don’t mean it’s a culture of malfeasance or people are doing this for the wrong reasons. They’re doing it because they are accustomed to grabbing everything, because that’s what you do. But ultimately, as we are learning, that is not always necessary or in the public interest.”

Department leaders acknowledge that DOJ perennially struggles to find the software and IT personnel resources necessary to store and comb through electronic evidence, which must be translated into a format for attorneys to review and identify what must be turned over to defense during discovery.

In one ongoing case, the US attorney’s office in Buffalo is under scrutiny from a federal judge who said prosecutors may have intentionally misled the court.

When agents raided the office of prominent Rochester developer Robert Morgan in 2018, they seized eight computers, two iPhones, and five external hard drives. The data proved too burdensome to timely review, according to statements from prosecutors and the judge. Prosecutors didn’t comply with multiple disclosure dates and admitted that they failed to process some of the computers entirely.

“It is evident that the government has demonstrated a disturbing inability to manage the massive discovery in this case,” wrote Judge Elizabeth Wolford of the US District Court for the Western District of New York, in dismissing the original indictment in 2020.

After DOJ re-indicted last year, Wolford ordered an evidentiary hearing to review the prosecutors’ conduct. The parties settled on the eve of the hearing in April, with three defendants pleading to misdemeanor bank larceny charges worth up to $3,000 in losses. The department originally called it a $500 million conspiracy, comparing it to the crimes behind the 2008 financial collapse.

The judge called off the hearing, noting the plea deals negated defendants’ need for further probing. But Wolford, citing the court’s “power to control admission to its bar and to discipline attorneys,” ordered the US attorney’s office to file a brief by July 1 that addresses her concerns of possible prosecutorial misconduct.

‘Prosecutorial Mindset’

Former DOJ lawyers say crafting narrower evidence requests requires a careful analysis of trade-offs and a confidence that’s particularly challenging for less-experienced prosecutors. For instance, when constructing a search warrant or a subpoena to uncover potential corporate malfeasance, prosecutors must consider how many employees’ correspondence they truly need.

“Do you ask for a smaller group that you know is going to give you highly relevant material, knowing that you might miss people on the periphery, or do you want everybody just in case someone on the periphery might have more responsibility than you think?” said Jill Steinberg, a former federal prosecutor in Atlanta and associate deputy attorney general.

“A lot of times people think more data, more information means you get to that truth. That training has been a part of the prosecutorial mindset,” said Steinberg, now a partner at Ballard Spahr. “But I think what we’re seeing more recently is the downside of having” evidence that you can’t use because there isn’t enough time to meaningfully review it.

DOJ continues to ask Congress for more funding to help close the IT disparity with Big Law and improve its ability to cull through the data.

For instance, the department requested an extra $27 million for US attorneys offices in the next fiscal year on “eLitigation modernization,” encompassing 52 new positions and technological upgrades. That proposal is pending before Congress.

More training and selective hiring of discovery software experts was also under consideration as a recommendation from Monaco’s advisory group, Mendell said. As is, DOJ devoted up to $1.5 billion in e-discovery vendor services through a mega contract awarded in 2020 that lasts through 2027.

But with the level of e-data growth only expected to outpace government resources, tasking DOJ prosecutors to refine their searches may be the more realistic, if imperfect, proposal.

“In a system that is not working well for them right now and they are not equipped to do these searches,” said Aixa Maldonado-Quinones, a partner at Zeichner Ellman & Krause and former DOJ prosecutor, “they should then err on the side of asking for only what they need, instead of for the world.”

To contact the reporter on this story: Ben Penn in Washington at bpenn@bloomberglaw.com

To contact the editors responsible for this story: Seth Stern at sstern@bloomberglaw.com; John Crawley at jcrawley@bloomberglaw.com; Gregory Henderson at ghenderson@bloombergindustry.com